However, pensioners will be hit hard because the extra income they earn from saving will have dramatically reduced, making them worse off. On the other hand, savers may leave the pound for better interest rates in other countries (hot money), causing a fall in the demand for the pound. As a result the value of the pound will fall, making exports cheaper and there will be an injection of net exports. In conclusion, the impact of loose monetary policy will be beneficial to the economy because extra consumption and investment will cause AD to increase which will increase economic growth. However, it takes a long time for changes in interest rates to feed through to consumption and investment and by then the economy may have gotten worse.
With everything that has been reviewed, I would recommend that CSI lease vs buying right now. The financial returns for the lease option are that it has a higher annual payment and a lower after tax cash flow, but does free up some instant cash and relieves CSI from owner responsibilities on the building. Leasing will also let CSI build up capital to do the end of term buy option without having to have an additional 200,000 of working capital on hand for the bank and will reduce the need for a loan and credit mark. The second option is to
| Time is so important when it comes to financial matters because money received today will have different values in the future. The amount can increase or decrease depending on inflation and interest (Baker and Baker, 2011). | How would you use the time value of money to your financial benefit? | I would invest as much money as I could when interest rates were higher. This would make more money for me.
Based on that, Corporation B is desirable to Corporation A as it has a greater net present value. The Internal Rate of Return (IRR) is defined as the discount rate that equates the present value of the project’s free cash flows with the project’s initial cash outlay (Keown, A. J., Martin, J. D., & Petty, J. W. (2014). Based on the Internal Rate of Return rule, an investment is suitable if the Internal Rate of Return exceeds the required return, it should be rejected otherwise. Based on that, Corporation B is preferred over Corporation A since the former has a higher Internal Rate of Return. Examining the above, the Net Present Value and the Internal Rate of Return are closely related.
Although the bonds have the lowest cost of issuance among the choices, its Net Present Value (NPV) of $219 million is lower than the HUD 242. The Business Dictionary defines NPV as “the difference between the present value of the future cash flows from an investment and the amount of investment” (Business Dictionary, p. 1, 2012). The collateral requirement for the bonds is also much higher than the HUD 242. Because the collateral includes escrow on ECH’s gross receivables, ECH possibly may have less control over its future revenue stream. The simulator also took note of the four-year time frame of the expansion project versus the three-year spending limit on the bonds.
Assignment 5: Credit and Loans (25.0 points) 1. If you are borrowing money and paying interest, would you prefer an interest rate that compounds annually, quarterly, or daily? Why? (2-4 sentences. 1.0 points) Assuming the same rate, annually the less often it compounds the less interest being paid overall if different interest rates though that changes things.
Based on IRC Section 25A(d)(3), MAGI is equal to AGI before taking into account deductible IRA contributions, student-loan-interest deduction, higher education costs, U.S. Savings Bond interest, and certain other items, which makes MAGI higher than AGI in most cases. Based on the information above, MAGI is subject to a lower dollar amount than AGI is when benefit begins to phase out even if MAGI is higher than AGI. If Mr. Wilson’s MAGI is over $120,000, he is better off checking if he can deduct the tuition and fees in the Adjusted Gross Income section of Form 1040. Because tuition and fees deduction has a higher phase-out hurdle than Lifetime Learning credit, Mr. Wilson could possibly benefit from it if his AGI is less than
more than renting, which seems too small a premium, given all the advantages of owning. However, ownership is also more risky. Since they can cover up to $5,923 of shortfall, if the 1998-2000 budget is exactly correct, there is considerable margin for error. Any remaining surplus is available for mortgage reduction (on the anniversary dates you can usually prepay some part of the balance) and RRSP contributions. Thus, they can buy a house in four years time, and possibly earlier.
The total amount of machines on-hand seemed appropriate for production, but the number designated to each product was altered since more units were being produced of C_Fad. Automation for Cake and C_Fad were left at 4.0 and 3.0, respectively. Under fiscal policies, since the cash was available, $2 of dividends was paid out and $3,000,000 of bonds was retired. Given that a new product was coming out this year, it seemed necessary to require 10 hours of training per employee per year to keep everyone up-to-date on the products. Lastly, as part of the company’s Total Quality Management strategy, $1,000,000 was put toward Channel Support, and an additional $1,000,000 was put toward CCE and Six Sigma
However of those people errors may lie with the small time frame and time of day interviews occurred. The poll was completed in less than an hour and also at a somewhat late hour for a weeknight. Biases can occur here in that it’s possible for certain sects of the population to already be sleeping at this time. For example, elderly citizens and those with jobs tend to set earlier bedtimes than younger adults and those who are employed. This could bias any inferences about the population in that you’re only looking at only certain demographics across the potential republican voters.